Summer 2021 will likely be one of the hottest on record as dozens of U.S. cities experience all-time high temperatures. The extreme heat is causing hundreds of deaths, sparking wildfires and worsening drought conditions in over a dozen states.
Here are a few ways extreme heat hurts the economy – and a little good news.
Growth takes a hit. Research has found that extreme heat can directly hurt economic growth.
For example, a 2018 study found that the economies of U.S. states tend to grow at a slower pace during relatively hot summers. The data shows that annual growth falls 0.15 to 0.25 percentage points for every 1 degree Fahrenheit that a state’s average summer temperature was above normal.
Laborers in weather-exposed industries such as construction work fewer hours when it’s hotter. But higher summer temperatures reduce growth in many industries that tend to involve indoor work, including retail, services and finance. Workers are less productive when it’s hotter out.
Crop yields drop. Agriculture is obviously exposed to weather: After all, crops grow outdoors.
Research has found that extreme heat can directly hurt economic growth.
While temperatures up to around 85 to 90 can benefit crop growth, yields fall sharply when thermostats rise further. Some of the crops hit hard by extreme heat include corn, soybeans and cotton. These reductions in yields could be costly for U.S. agriculture.
A recent study I conducted found that an additional 2 degrees Celsius of global warming would eliminate profits from an average acre of farmland in the Eastern U.S.
Energy use soars. Of course, when it’s hot, energy use goes up as people and businesses run their air conditioners and other cooling equipment at full blast.
A 2011 study found that just one extra day with temperatures above 90 increases annual household energy use by 0.4%. More recent research shows that energy use increases the most in places that tend to be hotter, probably because more households have air conditioning.
This increase in electricity use on hot days stresses electric grids right when people depend on them most, as seen in California and Texas during recent heat waves. Blackouts can be quite costly for the economy, as inventories of food and other goods can spoil and many businesses either have to run generators or shut down.
Education and earnings suffer. A long-term impact of increasingly hotter weather involves how it affects children’s ability to learn – and thus their future earnings.
Research has shown that hot weather during the school year reduces test scores. Math scores decrease more and more as the temperature rises beyond 70.
One study suggested that students in schools that lack air conditioning learn 1% less for every 1 degree increase in the school year’s average temperature. It also found that minority students are especially affected by hotter school years, as their schools are especially likely to lack air conditioning.
The impact of extreme heat on development, in fact, begins before we’re even born. Research has found that adults who were exposed to extreme heat as fetuses earn less during their lifetimes. Each extra day with average temperature above 90 reduces earnings 30 years later by 0.1%.
Air conditioning can offset some of these effects.
For example, studies have found that having a working air conditioner means fewer people die, student learning isn’t compromised and extreme heat outside during pregnancy doesn’t hurt fetuses.
Not everyone has air conditioning, however, especially in normally cooler areas such as Oregon, Washington and Canada that have experienced unusually extreme temperatures this year. And in the U.S. South, where air conditioning is omnipresent, hotter-than-usual summers still take the greatest toll on states’ economic growth.
In other words, as temperatures rise, economies will continue to suffer.
Derek Lemoine is an associate professor of economics at the University of Arizona. Distributed by The Associated Press.
